Barton Malow to team with Detroit, Indianapolis firms in building new arena

Correction appended

The local construction giant that built the Detroit Red Wings' current home will also build their next one.

Southfield-based Barton Malow Co. was hired by the city of Detroit in 1979 to build Joe Louis Arena and is the majority partner in a joint venture formed to construct a $450 million, 18,000-seat arena scheduled to open for the 2016 hockey season.

Barton Malow-Hunt-White last week was approved by the Downtown Development Authority as the general contractor to oversee construction of the 650,000-square-foot multipurpose center to be built west of Woodward Avenue at I-75 in Detroit.

The other companies in the joint venture are Detroit-based White Construction and Indianapolis-based Hunt Construction Group.

A contract between the joint venture and Olympia Development of Michigan, the arena developer on behalf of Red Wings owners Mike and Marian Ilitch, will be signed by April 30, said Alex Ivanikiw, senior vice president at Barton Malow and one of the executives overseeing the project. Olympia will manage the DDA-owned arena under a 35-year concession management agreement.

Using a joint venture for construction is commonplace for such massive projects, said Ivanikiw.

Alex Ivanikiw, Barton Malow

"This is not something that's unusual," he said. "No single organization is going to have enough of the right kind of talented people to do a project of this size."

The joint venture will act as a stand-alone company to organize construction of the arena, he said. Staffers from each company will work on different aspects of the effort rather than each company handling specific portions.

While Barton Malow's résumé includes many sports venues, it decided it needed help.

"We needed more sports experience, so we reached out to Hunt," Ivanikiw said. "We suggested to them we form a team."

White was added in late 2013 because of the firm's familiarity with working in Detroit, he said.

It's vital to have a firm such as White to help navigate local politics and understand the local practices and rate of availability of employees, said Irwin Raij, a partner and vice chairman of the sports industry team in the Miami office of the Foley & Lardner LLP law firm.

"That local tie really helps bring it all together. You've really got to know your market. This is local, sensible and consistent with industry practices," he said.

Joint ventures or partnerships spread the risk allocation, Raij said.

"These are large projects, and there's risk involved. They burden the bonding capacity of each firm," he said.

The process

The selection process for the arena began in October 2013, Ivanikiw said, and the field of bidders was reduced to two. The names of the other firms were not disclosed.

More meetings followed before Olympia chose Barton Malow-Hunt-White last week.

"Hunt is one of the premier firms, as is Barton Malow, in handling projects like this," Raij said.

The next step is to finalize the contract with Olympia by April 30, then quickly move into planning, procurement and construction.

The construction group also will begin an effort to train and hire Detroit residents to build the arena.

The companies

All three firms have a rich history of sports venue work.

Barton Malow had $1.1 billion in 2013 revenue, and most recently was in the news as being named the managing partner of a joint venture overseeing a four-year, $150 million renovation of the famed 91-year-old Rose Bowl stadium in Pasadena, Calif.

Its other high-profile sports work includes designing, building and financing the $55.7 million Pontiac Silverdome in the mid-1970s, and, more recently, the $24.5 million expansion of Spartan Stadium and the $226 million Michigan Stadium expansion and upgrade.

It was hired last year to be construction manager for the $300 million redevelopment of Daytona International Speedway's milelong grandstand.

Barton Malow has 1,500 employees and 13 offices. It also builds offices, schools, hospitals and factories.

White Construction, which had $31.3 million in 2012 revenue, was part of the construction management team with Hunt and Detroit-based Turner Construction Co. that built Comerica Park.

White also was part of a joint venture with St. Clair Shores-based JM Olson Corp. to handle turning the old seven-story, 750,000-square-foot J.L. Hudson Co. warehouse into commercial office space attached to Ford Field.

The company last year was hired as a subcontractor for the $137 million private-public M-1 Rail streetcar project along Woodward Avenue, which will include a stop near the arena.

Bernard White, the company's founder, president and CEO, declined to comment.

Hunt Construction Group is one of the largest sports stadium and arena builders in the world. The firm has averaged $1.9 billion in revenue over the past five years.

Hunt, which launched in 1944, began building sports facilities in the early 1960s, and has done more than 100 venues since then, the firm said.

The financing

Property taxes collected by the DDA in a downtown district will pay for $261.5 million, or 58 percent of the arena's construction cost, while team owners are to provide the remaining $188.4 million.

Olympia, which will operate the arena under a 35-year concession agreement with the DDA, is the property development arm of the Ilitches' $3.1 billion business empire, which includes the Red Wings, Detroit Tigers and Little Caesars.

Under the deal, Olympia keeps all revenue generated by the arena, including concessions and parking, and all money from any naming rights deal. There will be 12 five-year renewal options for its 35-year management deal.

The arena

Olympia has disclosed very little about what the arena will look like, or even its specific placement within the site footprint.

In May 2012, the Red Wings' ownership selected Dallas-based HKS Inc. as the arena architect, according to Sports Business Journal. The team and firm declined to confirm or deny the report. HKS will design the venue with the Cambridge, Mass.-based architectural firm NBBJ, the sports industry trade magazine said.

It is known that the long side of the arena will be parallel to Woodward, and its footprint is estimated to be about 2.5 blocks.

A single 500-space garage is part of the project, but no surface lots.

The plan says the new arena will have 1,200 premium seats and 10,000 square feet of retail including a Red Wings merchandise store, restaurants and other retail.

Olympia has committed to building or attracting another $200 million for development around the arena, such as retail, commercial office space and housing.

Joe Louis will be razed and the site redeveloped after the new venue opens. The state is paying up to $6 million for the demolition once the Wings leave JLA.

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